Real Estate

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Transcript of Real Estate

Real EstateReal Estate As An InvestmentWhy is Real Estate a good long term investment?Real Estate-buying land and any building on it.-investing in real estate is considered a good way tocombat inflation.-historically a safe investment.(Least liquid investment you can make because it can take months or even years to sell.)

Types of Real EstateVacant Land-buying up physical land with no buildings on it.-speculative type of investment that someone is expecting the value of the propertyto go up over time.

Single-Family Houses

-average house that you would personally live in or rent out to other people.-typically paid for with a MORTGAGE.-when renting out a house, the renter has responsibilities to take care of the house.Rental Properties-many types of real estate designed for owners to rent out to tenants.• Duplex- a building with two separate living quarters.Separate entrances but living together in the same place.

• Apartment Complex- group of many apartments withcommon facilities such as rec areas, clubhouses and parking lots.

• Condominiums- individually owned unit in an apartment style complex. Usually bigger and multiple levels of floors than a regular apartment. Person owns the condo and partial owner to common facilities in the complex.

Types of Rental Properties

-tend to be second homes for vacations or for retirement years-this property tends to be in areas by beaches, lakes and mountains.

Recreation and Retirement PropertyWhat type of real estate are you more likely to be involved in the next 10 years?Section 2:Renting and ResponsibilitiesWhen you are renting, does it offer any investing potential?Landlord and TenantLandlord

– a person who owns a commercial or private property who agreesto rent or lease it to other people.Tenant- a person who occupies land or property rented from a landlord.

LeaseBinding contract that lays out the conditions and responsibilities of a rental agreement, both for the landlord and the tenant.

Explains: Monthly rental price, down payment required, payment due date, length of the lease, utility responsibilities and what happens when you break the lease.Other requirements the landlord might require.

Cosigning-if the landlord thinks you will not be able to make payments, they may require someone to sign the lease with you.-this person would be required to pay, if you can't.

Breaking A LeaseBreaking A Lease-if you feel you are going to break the lease, move out to avoid penalty.-penalty varies depending on the lease you sign.

What are some responsibilities of a tenant?Section 3:Mortgage-a loan to purchase real estate.-most people borrow money to buy property because large sums of cash areneeded.

-borrowing money to make an investment is called leverage.-meaning only a small amount of the purchase price is your own payment.-usually a down payment of 20% of the price is required.Ex. A house for $300,000 would require a down payment of what?

As property gains in value, the original cost of the mortgage does not change.-When you eventually sell the property, you keep the difference between the sales price and the mortgage. This is called EQUITY, or ownership interest.

Things To Think About When Owning Rental PropertyMonthly Payments-as your tenant pays monthly, make sure you are charging monthly an amount that is more than your monthly payment on the mortgage to maintain a positivecash flow.

What is a mortgage? Why is it important?How do most people pay for a house?